Cisco Systems to Acquire Netiverse

Cisco Systems Inc. Friday took another
step to satiate its hunger for content switch companies with the purchase of
privately-held Netiverse Inc. for
$210 million in stock.

Cisco currently holds a minority stake of 20 percent in
Netiverse. The acquisition will be accounted for as a purchase and is
expected to be completed in the first quarter of 2001.

In connection with the acquisition, Cisco expects a one-time write off of up
to $.02 per share for purchased in-process research and development
expenses.

Convinced that the key to success in the Net sector lies in networking, Netiverse
is working to create a new content-aware technology that can accelerate
content server functionality, firewalling, intrusion detection, content
routing and server load balancing.

Friday’s play strengthens Cisco’s content networking solutions by offering
its customers added performance capabilities for meeting the growing demands
of distributing Web content and managing large amounts of Internet traffic.
Netiverse’s technology was developed specifically for use across multiple
product lines and will be integrated into Cisco’s existing content
networking solutions.

The 34 employees will be led by Netiverse Chief Executive Officer Gururaj
Singh and will join the Workgroup Business Unit in Cisco’s enterprise line
led by Senior Vice President James Richardson.

Netiverse is funded by Sequoia Venture Capital, the company that backed
Cisco, Network Appliance, RedBack, Stratacom and others.

“Netiverse represents the future of content-aware switching”, says Michael
Goguen, Partner, Sequoia Venture Capital. “The proven background of the team
and their laser-sharp focus made it a no-brainer to invest in them.”

For Cisco, the move marks a logical addition to its portfolio, which the
firm believes will reinforce its hold as a top network provider specializing
in switches and optical networking.

The deal also signals the return of Cisco’s business dealing in the U.S.

Last Friday, the company teamed with investors to purchase 80 percent of
Italtel, Telecom Italia’s computer network equipment unit, for $765 million.
Cisco’s cut was 19 percent. The two companies plan to provide broadband
integrated data, voice and video services for fixed-line and mobile phone
network services.

Earlier in June, the titan bought HyNex, a unit of Israel’s Elbit, for $127
million in cash and stock to add products for international
customers.